A home equity line of credit (HELOC) is a flexible way to tap into your home’s equity for everything from home renovations to debt consolidation. But like any financial product, there are costs involved. HELOC closing costs are an essential part of the equation, and it’s crucial to understand what you’re paying for -and why.
At Figure, our HELOC structure stands out from traditional bank HELOCs. We’ve designed our process to be faster, digital, and more transparent so you know exactly what you're getting into. Let’s break down the typical HELOC closing costs, ongoing fees, and how Figure’s approach can save you time, money, and headaches.
Key Takeaways
HELOCs typically involve closing costs, including appraisal, origination, and documentation fees.
Figure’s HELOC has a simplified fee structure with fewer upfront costs and no surprises.
Ongoing fees like annual charges and inactivity fees can also impact the cost of your HELOC.
No closing cost HELOCs are available but may have higher interest rates or other trade-offs.
Understanding HELOC fees upfront can help you budget effectively and avoid unexpected expenses.
HELOC Closing Costs
Most HELOCs come with a variety of closing costs. Here's a breakdown of the most common fees you might encounter when opening a traditional HELOC:
Origination Fee
What it is: A fee the lender charges for processing and approving your HELOC application.
Typical cost: 0.5%–1% of the total loan amount.
Appraisal Fee
What it is: An appraisal determines the current market value of your home.
Typical appraisal cost: $300 – $700, depending on your location.
Figure Difference: We leverage automated valuation models (AVMs) in many cases, which eliminates the need for a traditional appraisal and provides for lower costs, if any.
Application Fee
What it is: A fee charged by some lenders for processing your initial HELOC application.
Typical cost: $100–$500.
Figure Difference: No application fees, ever.
Credit Report Fee
What it is: The cost of pulling your credit report as part of the underwriting process.
Typical cost: $30–$50.
Figure Difference: Figure doesn’t charge a credit report pull fee.
Title Search and Recording Fees
What it is: A title search ensures no liens on your property, and recording fees are paid to local government offices.
Typical cost: $200 –$400 combined.
Figure Difference: Figure doesn’t charge for a title search or recording fees.
Document Preparation and Notary Fees
What it is: Costs associated with preparing and notarizing the necessary loan documents.
Typical cost: $100–$300.
Figure Difference: In locations where available, Figure uses Enotary for closing at no additional cost. If Enotary is not available, traditional notary services may be required, with fees up to $380.
Ongoing HELOC Costs
In addition to closing costs, ongoing fees can impact the overall cost of your HELOC.
Annual Fee
What it is: A yearly fee to keep the line of credit open.
Typical cost: $50–$100.
Figure Difference: No annual fees.
Minimum Withdrawal Fee
What it is: Some lenders require a minimum withdrawal each time you access your HELOC.
Typical cost: $25–$50 per withdrawal.
Figure Difference: Minimum withdrawal fee is never charged, but there is a minimum draw amount ($500, unless in TX, then $4K)
Inactivity or Cancellation Fees
What it is: A fee is charged if you don’t use your HELOC or close the line early.
Typical cost: $200–$500.
Figure Difference: No inactivity or early closure fees, giving you the flexibility to use your HELOC as needed.
Differences in HELOC Fees: Traditional Bank vs. Figure
Traditional bank HELOCs typically charge an origination fee ranging from 0.5% to 1% of the loan amount*, while Figure’s HELOC has an origination fee of up to 4.99%.
For an appraisal fee, traditional lenders may charge between $300 and $700, whereas Figure often reduces or eliminates this cost by using automated valuation models (AVMs).
Many banks impose an annual fee of $50 to $100 to keep the line of credit open, but Figure does not charge an annual fee.
If you close your HELOC early, traditional lenders may charge an early closure fee of $200 to $500, while Figure does not impose this fee.
Get started on a Figure HELOC today
Applying for a HELOC with Figure is fast, transparent, and hassle-free. With no hidden fees, no in-person appraisals, and a fully digital process, you can access your home equity with fewer costs and greater convenience than traditional lenders. Check your rate in minutes2navigates to numbered disclaimer and see how Figure’s streamlined approach makes borrowing simple and straightforward.
Ready to unlock the power of your home’s equity with fewer fees and faster funding? Apply for a Figure HELOC in just minutes2navigates to numbered disclaimer and see why we’re the top non-bank HELOC lender in the U.S**.
Additional FAQs about HELOC closing costs
How much does a HELOC cost?
The cost of a HELOC loan depends on the lender and the fees they charge, including origination, appraisal, and title search fees. Some lenders also charge ongoing fees like annual or inactivity fees. With Figure, you get a transparent fee structure with no hidden charges, making it easier to budget for your loan.
What are no closing cost HELOCs?
Some lenders offer HELOCs with no closing costs, but they may compensate by charging higher interest rates or adding other fees. While this can help reduce upfront expenses, it’s important to compare the total cost of the loan over time. Figure simplifies the process with fewer fees and competitive rates, so you know exactly what you're paying for.
Are HELOC closing costs tax deductible?
In many cases, HELOC closing costs are not tax deductible, but the interest you pay on your HELOC may be if the funds are used for home improvements. Tax laws can change, so it’s best to consult a tax professional to determine what deductions you may qualify for based on your financial situation.
How much does a HELOC cost per month?
Your monthly HELOC cost depends on your outstanding balance, interest rate, and repayment terms. During the draw period, you may only be required to pay interest, while the repayment period includes principal and interest payments. Figure offers a clear repayment structure, so you can plan accordingly.
What is the difference between HELOC vs. home equity loan closing costs?
HELOCs and home equity loans both use your home’s equity, but they have different cost structures. HELOCs often have lower upfront costs but may include fees like annual charges or minimum withdrawal fees. Home equity loans typically have fixed closing costs similar to a mortgage. With Figure, you get a streamlined HELOC process with minimal fees and no hidden surprises.
*Sourced from https://www.bankrate.com/home-equity/home-equity-loan-closing-costs/#home-equity-costs-and-fees
**Sourced from https://www.hel.news/articles/bank-home-equity-news/2023-heloc-originations-121324/
